14 January 2013

Eurofinas/Leaseurope response to "A Policy Framework for Strengthening Oversight and Regulation of Shadow Banking Entities"

Responding to the consultation, Eurofinas and Leaseurope consider it essential that the FSB bears in mind the fundamental differences in economic, market and regulatory structures that exist within its wide range of jurisdictions.

Before answering the questions posed specifically in the consultative document, their response describes the important role that leasing and consumer credit providers play within the European economy as well as the main characteristics of these firms, the EU regulatory environment for such players and how they are positioned within the EU financial system.

They consider that it is essential the FSB bears in mind the fundamental differences in economic, market and regulatory structures that exist within its wide range of jurisdictions. Hence, the following points must be taken into account in the evaluation and development of any policy framework:

• Leasing and consumer credit activities do not pose a systemic risk to the broader financial system.
• Leasing and consumer credit companies should not be confused with the wide range of activities that may fall under the concept of “finance companies”.
• Funding sources for leasing and consumer credit firms vary across the FSB’s jurisdictions.
• The European economy is structurally dependent on debt/bank financing. Economic agents make less use of equity and/or market-based funding compared to those in the US for instance.
• Financial regulation and supervision is well developed in Europe and already impacts (both directly and indirectly) leasing and consumer credit firms established in the EU. This may not be the case to the same extent in other jurisdictions such as the US and Asia for instance.
• New legislation would stifle leasing and consumer credit provision and could force some firms, and in particular smaller ones, to leave the market. This would adversely impact competition by reducing the range of finance options available to consumers and businesses.

The above points are developed in more detail in the response.

Full response

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